Economic difficulties are making it difficult for heads of households to provide for their families. Recently, the savings rate in the United States has dipped below zero, meaning that people are spending more than they are earning. This may present problems in years to come as Americans approaching retirement age may have spent all their money on gadgets instead of preparing for retirement. In addition, many people have not appropriately protected their assets because of poor spending habits. In particular, may individuals do not have adequate life insurance coverage to protect their families should there be a loss of the primary wage earner.
Life insurance is a protection against financial loss resulting from death of an insured. It is an insurance company's promise to pay a beneficiary a specific amount of money when the insured dies in exchange for timely payment of premiums. Life insurance helps replace lost income in the event of an insured's death. The death benefit may be used to replace income the family would need to maintain their standard of living after the death of a wage earner. The death benefit may also be used to pay off a mortgage loan and other personal and business debts, to create a fund for children's education, to pay final expenses, such as funeral costs and taxes, or to create a family emergency fund or a fund for a family member with special needs. However, there is not an option to provide for future life insurance protection for beneficiaries, which may be used to protect future generations from a loss of income and provide long-term financial stability.